Ukrainian Path for Anti-Corruption Enforcement

Recently I was co-speaking at the conference which gathered companies doing business in a pharmaceutical sector. Speakers were delivering speeches about recent legislative developments and I was talking about changes in anti-corruption sphere. My initial observations revealed that anti-corruption topic was far from the top in the list of existing problems the audience was dealing with. Frankly speaking, not much of them, in my opinion, ever took the anti-corruption regulations seriously. As one of attendees mentioned during the coffee break, currently the main aim for the businesses is to survive. Tax inspections, strict labor regulations, licensing and other regulatory issues leave no time to think about anti-corruption compliance.

But if you think about real reasons for such relaxed attitude, the answer is on the ground. There were several updates and improvements to anti-corruption laws, but they always lacked enforcement. So our laws may be as strict as UK Bribery Act, but until we have our own Serious Fraud Office, these laws are mere façade for international community.

The positive news are that similar authorities enforcing anti-corruption laws will soon (hopefully) be established in Ukraine. National Anti-corruption Bureau of Ukraine (NABU) will investigate corruption in public sector while National Corruption Prevention Agency (NCPA) will, as its name suggests, deal with prevention and assessment of corruption. The question is when (the process of establishment of both authorities already took much longer than expected), but the most valuable question is how.

Leaving aside NABU for a while, which will concentrate on a high profile corruption cases, I would like to speculate on the role of National Corruption Prevention Agency in the future fight against corruption in Ukraine.

NCPA may follow Slovenian anti-corruption authority approaches, which is quite similar with the Ukrainian authority in terms of powers. I’m recalling my meeting with the expert of the Slovenian authority, where he was passionately telling about their successes and role of the Anti-corruption Agency as a main driver for anti-corruption efforts. The Agency took proactive approach: one of their activity was to monitor and to analyze information about expenses of all officials (through the specially developed software) and, once inconsistencies revealed, to pass information to law-enforcement authorities for further investigation. If responsible body was unwilling to take action the Agency engaged media to attract public attention to the issue. And quite soon results became visible – Slovenia significantly improved its positions in different anti-corruption rankings.

Currently NCPA (some may notice that abbreviation sounds almost like FCPA) has all necessary instruments to repeat Slovenian Agency's success. It has necessary financing, broad powers and vote of confidence from the society. One of its powers is to issue orders obliging to stop anti-corruption offence. If the person or company does not react the Agency has a right to bring the offender to liability or, with regards to more serious offences, to pass information to competent law-enforcement authorities and to request a report on taken actions.

For example, current anti-corruption law requires any company to ensure development and enforcement of measures which are necessary and justified (you may notice a trail of UK Bribery Act here) to prevent corruption in the activities of such company. NCPA can potentially request information on implemented measures and open the case if the company failed to implement them.

So yes – the main question is how. And speculating about it I remain quite positive about the future role of NCPA, despite some worrying reports (follow the link, in Russian only). And I truly believe that joint efforts of Ukrainian compliance community and other concerned people will help the Agency to follow the right path.

In my next posts I will expand on the new requirements of anti-corruption law and measures to be implemented by the companies in order to avoid the risks of being targeted by NCPA.